Amberwood, the applicable principle of law in Ontario is that
positive covenants do not run with the land; and ( iv) the
respondents had failed to demonstrate that the benefit and burden exception to this principle — discussed further below — had
been recognized under Ontario law.

[28] Deputy Judge Caplan therefore concluded that the
respondents had failed to prove their claim, and he dismissed
their action. He did not address the conditional grant exception
to the positive covenants rule.

( iv) Second appeal decision

[29] The respondents appealed. On February 4, 2016, the
appeal judge ruled that Deputy Judge Caplan’s reasons were
legally insufficient and that they were tainted by several factual
and legal errors. These errors, in her view, included consideration of the positive covenants argument “without any regard to
the factual and legal analyses” of Deputy Judge Kilian and
Swinton J. The appeal judge held, at paras. 49 and 52, that
these analyses were binding on the appellants, as parties to the
first action, under the principle of res judicata. As a result, she
ruled that any challenge by them to Deputy Judge Kilian’s
factual findings in the first action would constitute “a collateral
attack and an abuse of process”.

[30] In light of the errors she found had been made by
Deputy Judge Caplan, the appeal judge conducted her own
analysis of the positive covenants argument. Citing Amberwood
and Parkinson, she recognized that, under Ontario law, positive
covenants generally do not run with freehold land. She framed
the questions before her, at para. 65, as “whether the exceptions to this rule are the law in Ontario, and whether the
exceptions apply to the facts of this case”. She elaborated,
at para. 69, that the application of the benefit and burden and
conditional grant exceptions to the positive covenants rule, as
discussed in Amberwood, were at issue.

[31] Amberwood was thus central to the appeal judge’s analysis.She undertook a detailed review of it and of the subsequent de-cisions of the English Court of Appeal in Wilkinson v. KerdeneLtd., [2013] E.W.C.A. Civ. 44 and the Ontario Superior Court ofJustice in Wentworth Condominium Corp. No. 12 v. WentworthCondominium Corp. No. 59, [2007] O.J. No. 2741, 57 R.P.R. (4th)128 (S.C.J.). Based on her interpretation of these cases, she heldas follows:(1) the majority of the Amberwood court rejected the applicationof the benefit and burden exception in Ontario, concluding